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tv   Street Signs  CNBC  January 4, 2018 4:00am-5:00am EST

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welcome to "street signs." i'm joumanna bercetche >> i'm willem marx these are your headlines. europe gets in on the rally after the nikkei hits the highest level since 1992 disappointing d ining deben after slow holiday sales tech giants rush to fix bugs that put nearly all phones and computers at risk after google
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research revealed security flaws in chips and crude prices hit the highest level in three years reaching heights not seen since the slump in oil boosted by ongoing tensions in iran all right. we have got the composite pmi services number for eurozone, came out slightly higher, 58.1 expectation was 58 that's higher than the last number of 57.5 i think this takes it to the highest level since april 2011 so still really strong numbers coming out of eurozone here. switching to european markets. let's look and see what the picture is like for trading this morning. we did have an extremely strong
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session in asia overnight. i'll get into that in more detail shortly the u.s. main three indices making new highs again another session where s&p, nasdaq and dow jones made new highs. the momentum is continuing into europe you can see the stoxx 600 is opening up about 0.5% stronger that's a strong open for european equities. you can see it's broad-based every index in the eurozone and in the uk are all starting very strong this morning. ftse 100 up 0.1% i should tell you that we will get the uk pmi services number in a half hour's time. that's a very important number for the uk given the dominance of the service sector and the economy. as you can see, the picture is positive let's switch the sectors quick look there you can see the only sector underperforming today is real estate interestingly we have a real estate guest coming on in about
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45 minutes so we can talk about all of those things leading the upcharge we have construction material up 1.2%. autos having another good day. autos have been interesting. first day of the year struggled, the last couple of days have seen a comeback. vehicle sales numbers came out of the u.s. yesterday. banks, industrials, oil and gas having strong days almost all up 1% as a sector the asian markets, we did say that the mood in asia was a lot more positive in the overnight session. as you can see, nikkei had a stellar session, up 3.3% or so that takes the nikkei to the highest level since 1992 it would need to rally another 65% or so to make new record highs. still some way to go broader asian markets, also a
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positive day across all markets in asia. nikkei leading the charge. 3.3% up. nikkei was closed after the last few days the picture in china was positive shanghai up 0.5% >> a lot of positive numbers there, except for debenhams after the company cut its profit forecast after slow holiday sales. the british retailer posted a 2.6% fall in like for like currency sales in the final quarter. debenhams said trading at the start of the quarter was particularly disappointing and it expects full-year pretax profits to fall between 55 million and 65 million pounds, down from a forecast of 83 million. profits, 28 million pounds, despite them finding 10 million pounds in cost savings bad news for them.
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>> it's interesting in the context of the next earnings we had yesterday. next is a clothing retailer, but they had a strong christmas season and they had a rise in sales of.5%. for debenhams, they also saw a rise in sales over the christmas season, but it came at the expense of heavy discounting, lots of sales, and that basically ate into their bottom line margin. if you look at the numbers, their margins for 2017 are about 150 basis points lower than the previous year because the only way they're getting more sales is by applying these heavy discounting techniques add to that the fact that costs are going up costs for 2018 will go up 1% they estimate given the higher fixed costs involved with the longer leases, with rents, office space the picture together is not a good one >> after the numbers for next
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yesterday, we saw debenhams rising 3.8% at one point looking at other retail stocks in the uk, debenhams down there at 17.8% marks & spencer down 2.4%. sports direct down more than a half percent not good news on either front. >> joining us is wil hobbs from barclays before we get into other big themes, i wanted your take on the retail numbers it appears it's a tale of two stories. you have next, strong numbers yesterday. debenhams disappointing. what do you think about some of the challenges facing the uk retail sector this year? is it a sector you want exposure to if so, what are the criteria you're looking for >> it's a great question the difficulty looking at uk
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retail, the problems are obvious. the consumer is suffering a wage cut that should abate over the course of this year, but the back drop is tough for consumption and you have that competitiveness of amazon and the like, making price competition extremely keen with all the uk-specific stories, i think for investors, you have to pick carefully the uk economy is entering darker territory you know, consumption will be softer because of that real wage cut. investment looks softer, too so be very careful there is value out there but you have to pick carefully >> devil in the detail so one of the main stories yesterday was the federal reserve minutes. so the federal reserve officials expect tax cuts to boost consumer and business spending that's according to minutes from the fed's december meeting but fomc members remained uncertain over the overall economic impact of the 1$1.5 trillion u.s. tax law.
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the minutes showed disagreement over why inflation is low and how long it will stay there. the fed pencilled in three rate hikes for this year. in the meeting some members raised concern that keeping rates low for too long could inflate bubbles. wil is still with us we didn't get a lot of information out from those new minutes, even with the new governor going with the three hikes for the new year do you have a differing view >> i think it may be less than that, but there's upside risk. the thing to point out, if you look at the dot plot now, if you look at the past four rate rising cycles, you averaged 225 basis points per anum. even if they do three this year, that's way lower in terms of
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pra pace >> do you think if they do more than that, it puts the equities trade at risk? >> it's so moderate there should be minimum levels of disruption. generally what you look at in a rate rising cycle, is what is driving the rate rising cycle what is making interest rates go higher generally it'sgrowth and inflation prospects. generally that offsets the effects that rising interest rates has on valuations. so you find the stock market tens to outperform bonds during rate rising cycles if it gets sharper than that, some bits of overborrowing that we probably have in the economy get tougher to manage generally. the thing you're looking at and hoping for is that inflationary forces remain benign and that the fed is allowed to go about its business of untangling himself from the extreme and successful monetary policy problems >> that's the key word
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you said gradual inflation should allow central bankers to gently let the air out of a decade bull market and bonds should be a headwind for bonds i'm surprised to hear thatpoin made about credit. everyone will say at this point the credit spread is so tied to duration, if you're investing in the u.s., it's mainly a duration play here. >> within the u.s. we are arguing that you should probably want to take credit risk you have to get some carry that's the thing the thing with regards to credit is taking selected credit risk we see default rates reminuting l remaining low. the economy still looks good if you look at it, making real returns in the fixed income complex is difficult now but, you know, you have to be aware of sudden shocks and starts at the moment people are calling it a goldilocks environment.
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the growth outlook looks good, these trades can still continue, but you have do it with eyes open >> let's see if that goldilocks environment continues. thank you very much for joining us on the show today >> if you want to talk to us about that environment, e-mail the show the address is you can follow us on twitter, @streetsignseurope@cnbc coming up, anyone senintendo shares soar. more on that when we come back ♪ dad!
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that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. welcome back chief executives of the uk's biggest companies will have earned more money by lunch time today than the average british worker will earn in the year that's according to research from the cipd and the high pay center the findings prompted the groups to declare today as fat cat
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thursday >> quite catchy. intel is among the world's leading chipmakers racing to patch a vulnerability. this could allow hackers a back door into almost any computer, server or smartphone into the world. goingogle first alerted intel i the flaw a few months ago. amd said it believes there is almost zero risk to any of its processors at this time. intel says software patchers could diminish performance by up to 30% but would impact larger servers like amazon rather than ordinary pc users. >> we have found no instances of anybody actually executing this exploit. so we have found no case where anybody has done this. what we are constantly learning,
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and you see this from time to time across everyone's products, we are finding things that we need to patch and fix in order to avoid somebody exploiting this that's why we say it's not a flaw it's working like it should. >> sticking with tech, spotify has filed confidentially with the s.e.c. ahead of a potential ipo. the music streaming service is aiming for direct listing on the new york stock exchange in the first half of 2018 such a listing would largely cut big banks out of lucrative ipo fees and make it the largest company to go public in this way. last year spotify was valued at as muchas $19 billion. let's talk about crypto. merrill lynch stopped advisers from trading in a major bitcoin fund it bannedthe team from pitchin bitcoin investments or bitcoin investment trusts. it joins other banks like ubs
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which prevents advisers from trading certain bitcoin products the majority of wall street big names have also blocked trading bitcoin futures. the nikkei ended the day at the highest level since 1992 after surging more than 3% in its first day of trade in the new year manufacturing expansion in japan hit the fastest pace since february 2014 in december. the figure rose compared to the previous month to 54 amid an acceleration in new orders nintendo is going into china. shares in the japanese gaming giant jumped more than 4% on a report that it is launching pokemon go in china. according to the financial times, the game's developer has struck an agreement with the chinese company to bring the brand to the world's biggest gaming market. arjun joins us on the set. the first thing that jumps out
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to me about this story, why were nintendo not in china to begin with >> they had problems at the start of 2017. authorities banned pokemon go citing concerns over safety. you have to play this game while walking around they were worried people would walk in front of buses they also cited privacy concerns, give than your location has to be on to play this game. so they banned it. >> is 2018 looking like a positive year for nintendo >> so far. if you look at the moment when this game was released in july of 2016 from that time to now, the stock is up nearly 200%. that's not due to pokemon go, but that was the catalyst to revive interest back into nintendo the characters and the rest of it nintendo released a number of other mobile games and a console called the nintendo switch that sold 10 million units, above expectations, this year
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they expect to sell another 20 million units. that's a strong performance for a new console. and it revived games like zelda, mario cart, and all these other games that have been so popular on older consoles. that's helped anyonintendo's revenues and attract new customers. >> i will put my hand up and say i have never played pokemon go >> neither have i. >> guys. >> this game came out in 2016, how is this game still popular >> when it was released t had hundreds of millions of players. everyone was downloading it. i remember the fever in 2016 >> exciting time in your life. >> everyone was downloading it i walked in my local park, people were in groups playing it i was also playing it, it was the weirdest moment ever it has dwindled since.
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the players, as of around april last year, was about 65 million. that has gone even lower, but they have a solid core of players, and they have added new features, released new pokemon on to the platform, and invented things like raid battles, where you can go and fight other people so they got a number of new features which kept the core user base attached now china is a massive mobile market, mobile game revenues are expected to be in the region of 17 billion so this could be a way to revive interest back into pokemon go and get on a new bunch of players. >> thank you very much arjun kharpal coming to a london park with his smartphone near you soon britain must keep an open mind when it comes to trade post-brexit. that's according to trade secretary liam fox "the financial times" has reported that uk is considering membership of the transpacific
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partnership once the country left the eu. mr. fox said it was too early to make a decision but the government would keep all options open >> we don't know what the success of the tpp will yet look like because it is not yet negotiated so it will be premature for us to be wanting to sign up something that we're not sure what the final details will look like however we have said we want to be an open, outward looking country. and it would be foolish for us to rule out any particular outcomes for the future. so we'll keep an open mind we'll want to talk to our global trading partners >> ta towe are joined by the hef trade policy from the british chambers of commerce anastasia, based on what he said about tpp, i can't help but wonder why is the british government spending so much energy looking at trade deals outside the current trade deals
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with eu partners which should be a focus? >> i completely agree. from a business perspective what matters most is retaining the existing agreements, all the existing benefits of those the interesting thing about the tpp agreement is that actually many of the countries that the eu already has an agreement with or signed an agreement with are in the tpp >> so they're among the 65 nations that the eu has a trading deal with. is it as easy as the british golf se government seems to be implying? >> knot quinot quite. this would require three parties sitting down, the uk, the other country and the eu this would retain benefits for the other country, but for uk exporters it would not be the same also you cannot replicate the deals with the tpp it's a different sort of beast it's almost aiming to be a
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single market in the pacific region and the uk needs to think would it be happy signing up to something like this. >> one other question about this the idea of rolling over these agreements, and the eu having a seat at the table with that negotiation. now we have this negotiation on transition over the next few months the british side want it done by the end of march that's something michel barnier hinted at. given the deal could last up to 2020, does that change the ability for people like liam fox to make these trade deals in that time? >> that's still an open question definitely at the moment we cannot negotiate our own trade agreements, though we can scope them out during that time it's unclear and probably up for negotiations with the eu whether we can sign on the dotted line so even considering this kind of uncertainty, what really must be put in place first and foremost is ensuring we can take advantage of the agreements during this transition period that we are currently party to and then look at potential new
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deals that we could sign down the line >> dr. fox talked to mps eventually he said there is no agreement with those countries to roll over the deals that they have at the moment he said there is an agreement on process. is that good enough for your members? >> not at all. we need more clarity we need to know that discussions have already progressed. it's important that the government has indicated its intention to do so but really we are still waiting and companies do need more clarity in order to make investment decisions to keep expanding in the markets and to keep buying from those countries. >> we hear casual labels about kand canada plus plus does that until confidence >> it means nothing. we need to understand what it means in terms of the prabl practicalities, data protection, i.t. protection, people moving
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goods and services easily as they do now. we need to move away from discussions of models and talk about practicalities and we need more details this year >> switching this the other way. you said at the beginning that maintaining the existing agreement would be the best thing for businesses that you represent. are there any businesses that will stand to gain once the uk leaves the single market >> the uk still needs to decide what it wants in terms of its fight pictu future relationship with the single market. how much access we will have, what the partnership will mean it's difficult to understand exactly what the future relationship will look like and who the winners might be >> one criticism we have heard repeatedly is that politicians don't understand the implications of their actions. how does that change >> well, politicians need to think more about the practicalities all of these discussions in terms of high-level policy and
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all these discussions of models, they don't mean much to businesses you'll find that many of your viewers will have been tuning out of all of these conversations. so, whilst next year unfortunately we still won't know as much detail as we would like, there does need to be more of a translation of the political language, so to speak, in terms of what it means for businesses making decisions, one-year, two years, three years down the line. >> why do you think business leaders have not been as involved as they would have liked in the negotiations, in these decisions being made over the past 18 months >> you have to remember the uk is setting out on an independent trade policy for the first time. so it means the structures for business engagement are not quite in place yet there is a bit of dialogue happening with government. we don't have the formal structures that canada has, the u.s. has, australia. this needs to be implemented if
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government wants the detail it needs from business to get the best deals going forward >> anastasia, thank you very much bumpy trade ahead. an editorial published in xinhua warns of a bumpy 2018 trade journey with the u.s it comes a day after the proposed moneygram and ant financial deal was stopped by u.s. regulators. for more on that, head to coming up, fire and fury at the white house as trump denouns steve bannon's comments about his presidency for your heart... your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain health supplement
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welcome to "street signs." i'm wilfred frost. >> i'm joumanna bercetche. these are your headlines europe ends 2017 with the best pmi readings in seven years as stocks get in on the global rally spurred by fresh highs on asia and wall street. shares slide as debenhams cuts profit outlook on slow
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holiday sales driving rival marks & spencer lower. tech giants rush to fix bugs that put nearly all phones and computers at risk after google research revealed security flaws in chips and crude prices hit the highest level in three years reaching heights not seen since the slump in oil boosted by ongoing tensions in iran we have some uk numbers that came out the december services pmi came in at 54.2, that's above expectations of 54 so a beat there. this is a very important sector for the uk economy, about 70% of businesses are service so this is a strong number for the uk economy we also got mortgage numbers as
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well the uk november mortgage approvals came in higher versus expectation. about 1,000 higher of course that is good for the home building and the housing sector as well positive numbers out of uk this morning. let's switch to european markets and see what the picture is like across the other indices. you can see ftse has come up a bit since we got those uk numbers. xetra dax, cac having strong days today, almost up 1.8% each. switching to fx, seeing what the picture is like there. after the fomc minutes, the dollar did stage a recovery. initially we saw some of the crosses versus the majors drop a bit. that seems to have reversed this morning. euro/dollar is back on the upward trend up 0.2%. dollar/yen climbing higher, 112.60 of course the asian session and
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nikkei was a strong one. and that has translated into the currency pair. cable still hanging in between that 135 and 136 mark. we've been there for a couple days now let's look at u.s. futures as i mentioned earlier, three major indices all made new highs in yesterday's trading session it looks like today will be a repeat of yesterday. we are looking at a much stronger open. dow jones pointed to open about 42 points higher just one-point higher for s&p and nasdaq also pointed to open up higher. iran has dispatched elite revolutionary guard units to three provinces in a bid to quell the ongoing unrest in the country. 21 people have died in the last week of protests that was sparked in part about the islamic state's economy. the demonstrations have now morphed into a challenge of iran's leadership.
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bill neely has the latest on this story >> the latest demonstrations today are state-organized, pro government demonstrations, people chanting for the regime all covered extensively by iranian-state television overnight we had more anti-government protests they mostly take place after dusk we had a week now of these often violent demonstrations the death toll is over 20. there's clear evidence this has shaken the iranian regime. we have ayatollah khamenei blaming those protests on foreign countries. he did not name any, but he's talking about the u.s., israel and saudi arabia on the other end we have president rouhani, relatively moderate saying it's wrong to
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say that this is just the worse of foreigners. he's calling for the protesters to be shown some understanding there's no doubt where the u.s. stands on this america's u.n. ambassador, nikki haley, saying it's nonsense to blame the protests on foreign powers they are, she says, spontaneous. president trump saying that not only the u.s. is watching but iranians are hungry for food and freedom and saying it's time for change no question the iranian regime is now hitting back. there have been hundreds of arrests. that's how the regime crushed the near revolution of 2009. this is not a revolution, not yet any way. but it's taken everyone by surprise, and it is potentially dangerous. back to you. >> that was bill neely unsurprisingly tensions in iran helped to push oil prices higher again. wti at the highest level in 2 1/2 years. wti up a half percent.
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brent up a quarter of a percent. back in washington, president trump has denounced steve bannon in response to damaging comments that his former top strategist made about the president and his family in a new book according to exerts from michael wolff's "fire and fury: inside the trump white house," bannon said a meeting held with russians by donald trump jr., jared kushner and paul manafort was treasonous in a rebuke the president said bannon does not deserve credit for trump victories and that he lost his mind when he was fired from the white house we are joined by tracie potts, our colleague from nbc in washington how has been the reaction to this when it comes to both bannon's comments, but also president trump's responses in washington >> it's been interesting because the reaction here on capitol hill has not been much at all, especially republicans they really don't seem to want
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to get involved. asked about it, they say it's a personnel issue, an employee issue, it's a political issue. personality issue. but they are not commenting or taking sides between steve bannon and president trump however they may be concerned about what, if any, impact this would have on the 2018 election. this inside look at the white house by someone who is very popular with conservatives later today the president sits down with republicans to talk about the upcoming election. the white house is insisting that the president's base of support remains strong this is an explosive book. some of the comments, some of the allegations made by steve bannon, especially against the president's son, donald trump jr., you noted the comment about that meeting with russians back in 2016. he calls it treasonous the white house calls that ridiculous he weighs in on the russia investigation saying that they're focusing on donald trump
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jr., and as he's quoted in the book saying they'll crack him like an egg. clearly the white house not happy with this at all in fact, sarah huckabee sanders said that president trump was furious over this book you can hear that in his statement. >> moving beyond the statement, it seems like president trump is also taking legal action against steve bannon can you tell us more about that? >> yeah. overnight a lawyer for president trump wrote a letter asking bannon to cease and desist making these comments saying that bannon violated his nondisclosure agreement. bannon worked with the campaign, and then he worked with the white house as chief strategist. he was fired but still in good graces with the president. they talked up through december. crust three months ago the president said he was a friend, a good guy obviously singing a different tune about that now. the president's lawyers are trying to get bannon to stop
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talking about what was happening inside the white house when he was there. >> thank you very much tracie potts from a rather misty looking morning in washington, d.c. talking about inauguration anxiety and housekeeping hiccups, if you want to learn more, head to for a lowdown of that book let's talk about mifid ii. it's the second day of trading since mifid ii got launched yesterday. mifid ii, the most significant overhaul of european market regulations since the financial crisis came into effect yesterday. the new rules had little impact on equity volumes, but fewer trades were executed in dark pools which are limited under mifid ii some trading platforms had to suspend a number of funds to make them mifid compliant. ireland tested the waters with the first sovereign issue of bonds as the new rules
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speaking to cnbc, it was said regulators would remain vigilant >> it's too early to tell what the exact impact will be of mifid ii we are closely monitoring the implementation and the impacts of mifid ii on financial markets in the eu. and depending on these developments, we will look in our toolbox to see when adjustments are needed on the side of liquidity issues, it's too early to judge. it's early to see what the impact of mifid ii has been on liquidity in the past month, because mifid started today. but we will closely monitor the impact and see what adjustments are needed >> i wanted to talk about unintended consequences when it comes to research costs. we've seen a bunch of surveys
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showing the larger asset managers are capable of absorbing the cost of paying for research, some smaller pund fus don't have that capability and have had to pass that on to the customer so the barrier entry for the smaller firms is quite high. it is benefiting the larger asset managers what do you make of that >> i think one of the areas where mifid ii clearly has already had an impacted is indeed in the area of research and execution. i think it's very good that mifid ii requires the unbundling of these two types of activities it gives the possibility to better selected those brokers that are good in execution and making sure you get the best deal as a client and also to develop a research market where you actually pay for your research.
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what we've seen in the past weeks and months, a lot of healthy debate on the value of research and how it will precisely impact larger and smaller players. >> that was the chairman of esma we are joined by fabrice boulon. you're an intermediation between potential investors and those who provide the research why should people not go straight to the big banks to get the research and go through you? >> i think mifid ii has been a personal struggle for the asset managers for the moment, they have a deep historical relationship with the banks. 2017 we have seen the activity of managers about the price discovery and trying to secure and start their research for the year i think the key point that mifid ii touches about valuing
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research has been pushed back. we see that coming in 2018 once that process is started, i think they will be going to an online platform and basically diversifying sources >> do you think research will be better targeted and cost efficient? >> i'm sorry >> do you think that research will end up being better targeted and more cost efficient? >> yeah. definitely besides the research, it's about mapping and discovery right now. as i said, like most asset managers, they were bound to three or four major banks. they're not even aware of what the research is like out there there's new type of research, alternative research coming to the market and the asset managers need technology to actually map and gather the input of the research that will lead to a more free market, i believe.
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>> you're a proponent of data and technology when it comes to this research. we heard a lot from guests talking about the subject saying the research on bundling part of this regulation change will mean some firms struggle and die. we'll have a survival of the fittest. do you think those firms that fail to spend money on technology will go first >> there's two things. one of the issues is the pricing. i think that could affect the market major banks have been clearly going for market share, trying to dump the price of research. that could affect independents that could affect the building of a new market. as far as technology, i think we are in a new era now the cloud-based technology was available out there. and it is much cheaper, much more available to everyone and new models and new products are coming into the market like what we tried to propose, a cloud-based system for managers
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that everyone can afford that's the game changer for the industry also. >> i have a question about research value how are you helping your investors or the people who are members of your marketplace to assess which research records they need access to? do you do calls, track them? can you back date? what's your process? >> clearly the research needs to be more granular before it was all about brokers assessing maybe twice a year or four times a year if someone actually liked this analyst or this bank. now i think the key word is you value with precise criteria, call analysts, and then the technology takes over and aggregates the data to have a continuous evaluation. but much more granular much more objective to give you
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a much better picture of what your research value comes from that's the way forward half of the asset managers are thinking about implementing that process. that will be change ing over the year 2018. >> what will stop some bigger firms from adopting an in-house model like deutsche bank has done >> that's really 50/50, i believe. the market needs to settle why would you build a massive franchise with in-house research if you have access to wider offering at a fair price, at a valuable price, with much better insight. i think there's been little moves in that direction so far some asset managers were inhouse already, thinking about bench marketing in-house research against external research.
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the outcome is not clear i think this is to be seen going forward. >> sounds like a lot to watch over the next few months thank you very much for joining us live from paris. coming up, hot property. we'll discuss the outlook for european reits coming up
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welcome back the brandy maker shares of remy cointreau shares fell after invest tech cut iexpectations and tesla numbers have fallen short of model 3
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expectations the carmaker also pushed back output targets on the model 3 sedan. it said it has made major progress in addressing assembly line problems. i think i heard that before. >> it's not the first time they delayed that production. switching to property, unibel rodamco is due to complete its takeover of westfield in the first half of the year our next guest expects the acquisition to spark a wave of deal making among retail property owners. i want to start off talking about this gigantic deal, the
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unibell rodamco and westfield takeover does this make sense why does it make sense >> i would say the deal is quite aggressive the pricing looks aggressive to us but in an age where amazon is taking over a lot of the sales, i think a lot of the listed landlords, a lot of the reit investors and owners of real estate are scrambling to take on some bargaining power, vis-a-vis the retailers. this is a merger of one high quality mall owner of another high quality mall owner and they're trying to consolidate position and have more bargaining >> does it create pressure for more consolidation across the sector in the european continent? >> does. in the uk you have an m&a situation going on rumors in the market that other smaller players could be taken
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over i think that will be driven by weak share prices and i think there will be more consolidation as some of the weaker companies are taken over by stronger ones. >> so, broadening it out, reits as an investment play, if you look at it against u.s. counterparts, there you have more insurers, pension types, in europe it's still a low number what needs to change to get more of an institutional investor involved in that space >> we're seeing a trend towards more institutional investors coming into real estate. it has to do with low rates of return on fixed income, on bonds at the moment in europe. there's a hunger for more yield, real estate provides that yield. >> also in the context of fixed income where you get negative yield in europe. on the subject of interest rates, if interest rates start to move higher, wouldn't that jeopardize some of the long-term
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assets in reit space >> it's a topic a lot on investors minds. what will happen to reits as interest rates go up i would say it depends on where the real estate is heading insofar as are real interest rates going up or inflax tion expectations are going up. if inflation is going higher, reit share prices should hold on relatively well. on the other hand, if real rates are going up and risk premiums are going up, reits are susceptible to downward pressure >> interesting i want to ask you a question about digital disruption and what that means for some of the outlooks, particularly the retail sector. we spent a lot of time talking about how bricks and mortar is at risk to the e-commerce websites popping up. similar story for office space
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the shift moved away from long-term office to short-term temporary highers, share arrangements how is that impacting certain sectors of the market? >> it's impacting massively. it's on every investor's minds retail is the obvious sector sales go online, there's less demand for physical retail space, it also has to do with industrials. we have the rise of coworking bringing into question why do corporates need tons of office space for occupation so it means more capex, lower returns for real estate and it means reit managers and owner also have to be more active as they manage real estate. >> your ten-second view, where do you want to invest next year? offices on the continent as a macro environment improves and
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residential real estate, niche sectors, self storage, healthcare >> peter, thank you very much for your time this morning not too long to go now until the u.s. opens a quick look at some of the futures. s&p 500 with an implied open up 1 point. dow jones with an implied open up 60 points nasdaq with another positive open, up nearly 14 points. >> the dow is almost going to break through 25,000 today it will be a big day for dow that's it for the show here in london. i'm willem marx. >> i'm joumanna bercetche. "worldwide exchange" is coming up next. is this a phone?
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bearing down, energy prices on the move as a major blizzard barrels up the east coast. we have full team coverage straight ahead. the dow, nasdaq and s&p 500 all sitting at record highs as wall street kicks off the new year with a bang and nintendo shares soar as pokemon go is set to launch in china. it's thursday, january 4, 2018 "worldwide exchange" begins right now. ♪ good morning a very warm welcome to "worldwide exchange" o


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